Current state of institutional sales?
Very interested in trying to move into this space from my current role (internal wholesaler at a large AM firm). I’ve heard the space is dying out but regardless I’d still want to make the jump as it is more market based than my current role. Curious to hear people’s thoughts/advice on it’s current state.
Based on the most helpful WSO content, institutional sales offers a blend of great pay, fewer hours than in corporate finance or research, less stress than in trading, and a nice blend of travel and office work. The hours typically follow the market, with a few tacked on at the end of the day after the market closes.
In the context of an IPO, salespeople play a crucial role. They start their involvement a week or two prior to the roadshow, brushing up on the offering company, making calls to their accounts, and pitching the deal. They set up meetings between the portfolio manager and the management team of the company issuing the offering. During the roadshow, salespeople from the lead underwriter often attend the meeting between the company and the buy-side PM.
In terms of compensation, IPOs typically cost the company going public 7 percent of the gross proceeds raised in the offering. That 7 percent is divided between sales, syndicate and investment banking (i.e. corporate finance) in approximately the following manner: 60 percent to Sales, 20 percent to corporate finance, 20 percent to Syndicate.
However, it's important to note that some institutional salespeople complain that many buy-siders disregard their calls, that compensation can exhibit volatile mood swings, and that they feel overeducated for what they do.
So, while there may be challenges, institutional sales can offer a rewarding career for those who are well-suited to it.
Sources: Institutional Sales Analyst Job Description and Overview, State of Market Discussion
Bump
Depends highly on the market and the products you'll be part of.
During my time on the buyside in DCM, I witnessed alot of day-to-day responsibilities of institutional sales being replaced by new functions on Bloomberg or by more streamlined backends. Before I left, most sales people were there to take new issues orders (which Bloomberg has been working on automating), pitching trade ideas which suits their traders book/finding liquidity for another client, general relationship management, and the occasional trade which was too sensitive/large to be done electronically. End result of this is less need for more bodies on trade floors in a position with limited upward mobility and many people staying there for life (or until the bank lets them go).
I can't see institutional sales going away as clients will always need a human point of contact especially for OTC markets or more complex products/derivatives, but I can see more of their tasks being automated and it would be up to the sales person to add value instead of just expecting activity to come their way. For example, I had many sales coverages at various banks just ping me over BBG asking if I would be trading at all today or just copy and paste runs their trader had already sent vs ones that would actively pitch ideas, analyze my book and suggest trades, keep my team appraised of new deals or syndication activity coming down the pipe, booking dinners/presentations/events with my team and various parties at their bank, etc.
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